The Morning Call
8/21/17
The
Market
Technical
This
is the most important chart today. On
Friday, the S&P closed below the lower boundary of its short term uptrend;
if it remains below it through end of trading on Tuesday, the trend will reset
to a trading range. As you can also see,
it is very near its 100 day moving average; so much so that if the S&P does
continue to decline, that MA will soon revert to resistance. To be clear, neither of these support levels
has been successfully challenged yet. Plus
the Dow remains some distance from its comparable support levels. So while the yellow light has started to
flash, we don’t know if this will ultimately be a negative. Time will tell us.
The
long Treasury continues to perform well, trading above its 100 and 200 day
moving averages, within its short term trading range and it long term
uptrend. It has made five higher lows
and now three higher highs. Bond
investors continue to bet on a weak economy and low inflation/rates.
Gold
also had a good week, finishing above its 100 and 200 day moving averages and
in a very short term uptrend. However,
note that (1) on Friday, it traded above the upper boundary of its short term
trading range intraday, but failed to hold above it and (2) then closed below
its prior high. While not terribly
alarming, it does suggest GLD may have lost momentum.
The
dollar’s chart remains ugly. UUP is
solidly in a downtrend and below its 100 and 200 day moving averages. There is some good news, i.e. it held above
the lower boundary of its short term trading range and made a higher low. That is not a lot for the dollar bulls to
hang their hat on; but it is better than a sharp stick in the eye.
The VIX had another
volatile week, closing up noticeably; that following another big up move in the
preceding week. It finished above its
100 and 200 day moving averages (both support) and above the upper boundary of
its short term downtrend for the second day (if it ends there today, it will
reset to a trading range). This pin
action clearly provides substance to my open questions as to whether the VIX made
or is making some kind of bottom extending back to late July and if I was
premature resetting the intermediate term from trading range to downtrend.
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